Volume II, edited by Robert C. Effros, contains the collected views of banking and legal expers, gathered at the second IMF-sponsored seminar of central banks general counsels. Matters of both international and domestic concern are addressed. The contributors analyze topics ranging from concepts of international monetary law to aspects of the debt crisis and the role of the international financial institutions; banking development in the United States, the United Kingdom, the European Union, and elsewhere; developments in the payments systems; and measures to counter money laundering.

Introduction

By the middle of the nineteenth century, the ancient game of chess had won a mass following. Grand tournaments were held in the capitals of the world. A system of rigorous ranking of victors and challengers came into being. The ordinary players and even the experts were enthralled when the tournaments pitted grand masters against one another. To many observers the complex gambits and lightning moves hinted at a sort of magic. Ordinary chess players could only marvel at the display.

One of the great chess champions of this period was named Steinitz. Steinitz reflected on the games of the masters. He came to realize that these games did not depend on tricks and chance, but were instead subject to strategic analysis. There was a strategy of attack and defense, of building power across the board. It was only when this power was properly marshaled and suitably deployed that the dazzling gambits made their appearance. The positions had to be planned and prepared. There were rules to the strategy that gave definition to the masters’ moves.1

Even as there are rules that define the organization of the game of chess, might there be rules that define the organization of other areas of life? Can one set of relationships give rise to a more successful outcome than a competing pattern?

There has been perplexity at the different rates at which countries develop. Few today would seek a magic explanation. There are many factors that contribute to the phenomenon of development. Among those generally identified are the literacy, skills, and outlook of the citizens, the resources at their disposal, and the accumulation of capital upon which they can draw. Some believe that there remain certain other factors that have not adequately been recognized. One factor that some investigators have considered is the system of organization of a society and, in particular, the rules that govern relationships within that society. Although there have been a number of efforts to develop a theory that relates law and development, the most comprehensive of them is probably that put forward by the German sociologist Max Weber. Weber, who had been trained as a lawyer, sought an explanation why during the same historical period there arose in Europe the modern legal system, the bureaucratic state, and the industrial economy.

Weber believed that the more rational a legal system of relationships, the more supportive it would be to the emergence of a capitalist-industrial society. He further believed that the legal systems of Europe were more rational than those of other societies, whether past or contemporaneous. Finally, he noted that in some measure the rational legal systems of European countries antedated the emergence of the capitalist-industrial society on that continent. He concluded that such systems had contributed to the evolution of that form of society.2

Some commentators, pondering the role of law in development, have proposed the existence of two basic forms of economic organization: market and command. In the market form, priorities for the allocation of resources are arrived at by private entities. In the command form, these priorities are set by the state. In the market form, relations between the actors are governed by a framework of private law encompassing contract, tort, and property rules. Ultimately, the rules must address the law of corporations, securities, negotiable instruments, and bankruptcy, as well. The role of the state is seen as establishing, supporting, and enforcing these relationships as well as providing limited public services such as defense and police. In the command form, relationships between the actors radiate outward from the state, which serves as the central decision-making authority. Rather than relying on the interaction of autonomous private units acting pursuant to general rules, the command form issues specific directives to public enterprises, which may be integrated into a general plan. It is characteristic of the command form that the directives impact on the real sector. The financial sector is viewed as accessory and may reflect only the bookkeeping of the real sector. By contrast, in the market form of organization the financial sector may play an autonomous role in the mobilization of savings and investments.

While the categories of market and command forms of economic organization may be useful conceptually, no economy can be said to be pure in the sense that it contains no admixture from the opposite category. Most observers would agree that the majority of the world’s societies fall generally within the market form of organization. As noted above, the characteristic of law in the market form of organization is general rules governing relationships between private entities. It would follow that a market form of organization without adequate general rules could be expected to function less efficiently than one with adequate general rules. Such general rules are supplemented as society becomes more complex and particularly when the society enters the stage of industrialization. While a bureaucracy may have formed at an earlier stage and may at that stage have been underemployed or even in a sense redundant, at some point in time its services become increasingly necessary. The need for bureaucracy appears concomitantly with the growth of regulatory law.

Regulatory law may be viewed as a sort of hybrid between the general rules of the market form of organization and the specific directives of the command form. It is more specific than the former and more general than the latter. It may take the form of legislation, regulations, decisions, or even compacts. Characteristically, it may emanate from government departments, instrumentalities, and administrative agencies. While traditional analysis of government at an earlier stage identified the executive, legislative, and judicial functions, some commentators have proposed the recognition of another factor in an industrializing society. This is the bureaucracy, with its characteristic product of administrative law.

The subjects treated in this volume involve a number of aspects of administrative law. This is true even though the legal framework that gives rise to them derives from domestic legislative acts or international conventions. In particular, current administrative law relevant to, and proceeding from, central banks is considered. On the international level, the contributors analyze topics ranging from concepts of public international monetary law, the role of the international financial institutions in the resolution of the debt crisis, and the progress of the European Community to a common market for banking services. On the domestic level, they consider the transformation of the command economies of Eastern Europe toward market economies, banking regulation in the United Kingdom and the United States, the expansion of products and services by banks, financial innovation, payment systems and their methods of risk reduction, liabilities of commercial banks, and the responsibility of central banks for the stability of financial markets. Finally, the contributors focus on both international and domestic initiatives to counter money laundering.

This volume is the second in a collection of revised proceedings of seminars that have been sponsored by the International Monetary Fund’s Legal Department, in conjunction with the IMF Institute, for general counsels of central banks. The volume, which reflects topics originally addressed at the 1990 seminar, contains the collected views of many of the foremost thinkers and actors in the field of banking, having particular reference to the legal aspects of the matters discussed. Following the main papers of the proceedings are the remarks of a number of distinguished commentators. Each of these commentators offers a distinct perspective on a given subject. The views expressed in the various papers and commentaries are those of the authors and should not be interpreted as reflecting the views of the International Monetary Fund or any other institution.

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Mr. Gianviti discusses the arguments supporting the proposition that the International Monetary Fund is the central bank of central banks. These include the role of the Fund as a lender of last resort, its ability to create liquidity by allocating SDRs, its responsibilities in the management of the international monetary system, and its (limited) regulatory powers over its members’ monetary policies. As for this latter category, Mr. Gianviti discusses the role of the Fund concerning exchange rate policies and certain exchange control measures of member countries. He examines the history of the par value system based on gold and explains the rationale for its replacement by a more flexible system, provided for in the Second Amendment to the Fund’s Articles of Agreement in 1976. Under this new approach, he notes that the Fund’s jurisdiction was extended to all policies that could affect exchange rates. Despite the breadth of this jurisdiction, the risk of excessive intervention in a member’s national policies is avoided pursuant to distinctions concerning members’ obligations made in Article IV, Section I, of the Fund Agreement. Next, Mr. Gianviti reviews the role of the Fund in collecting and publishing information from member countries regarding exchange controls and ensuring compliance by members with their obligations concerning exchange restrictions. He concludes by pointing out that as the Fund’s holdings of strong currencies are increased, it is able to continue to perform its function of assisting member countries to resolve their balance of payment problems.

Mr. Scott reports on two programs developed by the World Bank to help its members cope with economic problems: (i) structural adjustment lending and (ii) debt reduction. He begins by discussing (i) the conditions that led to the introduction by the Bank of the structural adjustment lending program in the 1980s and continues with a description of the content of such a program, including changes that must be made by countries moving from a command economy to a market-based one. Mr. Scott also considers the authority of the Bank to make such loans, their success rate, and sectoral adjustment lending. Thereafter, Mr. Scott turns to (ii) debt-reduction issues, including the nature and results of the Baker Plan. He addresses the Bank’s power to lend for debt reduction and how it determined when it could do this kind of financing. Finally, he distinguishes debt reduction from debt-service reduction, sets forth the criteria that a country must meet in order to be eligible for debt-reduction support, and explains the role of commercial banks in the process.

Mr. Jewett begins by reviewing the origins and structure of the Inter-American Development Bank. He describes its financial resources, including paid-in capital, callable capital, and loans. He discusses trust funds that the Inter-American Development Bank administers, cofinancing mechanisms that it has developed, and joint financing systems that it has created. Furthermore, he provides information regarding the complementary loan program. After briefly discussing the Inter-American Development Bank’s lending history, Mr. Jewett considers the effects of the Bank’s Seventh Replenishment. He summarizes the debate concerning the Bank’s changes in its method of calculating interest rates before offering concluding remarks regarding Inter-American Development Bank loan contracts and its policy against debt rescheduling.

Mr. Danino introduces the Inter-American Investment Corporation, including its purpose, its relations to the Inter-American Development Bank, and its financial resources. He explains the conditions that attached to its long-term loans, equity, and guarantees. He describes the Inter-American Investment Corporation’s government and corporate advisory services and outlines its operating guidelines and development criteria. Mr. Danino concludes with an analysis of the institution’s projects.

Mr. Truman discusses the origins, phases, and solutions of the debt crisis. He considers the effects of the Baker Plan and describes the five basic elements of the Brady Plan. He believes that, in hindsight, the debt crisis might have been handled differently and that both sides may have had inflated expectations. Mr. Truman points out that countries participating in debt relief face heavy pressures. He describes the problems related to debt reduction, including the role of commercial banks. Mr. Truman then considers the roles of the Paris Club and the banking supervisory and regulatory frameworks.

Mr. Wallenstein reports on debt-equity swaps. He defines a debt-equity swap as a mechanism by which a bank exchanges foreign sovereign external debt of a debtor country for an equity stake in a company in that country through privatization, stock market investment, or direct investment. He considers how swaps are created, why they can be beneficial, and what their other effects are. He examines other forms of swaps such as debt-for-nature and debt-for-commodities. He discusses the legal and accounting frameworks that support such swaps. Mr. Wallenstein addresses two methods for converting debt: the auction process and government regulation. He considers additional issues including denationalization, the absorptive capacity of a country, overpayment in redeeming the debt, and whether the total amount of investment in a country is liable to increase by the full amount of the swap. He evaluates the advantages of swaps and conversions for debtor countries insofar as a country can reduce part of its external debt at a discount from its face value. Then Mr. Wallenstein looks at how debt-equity conversion funds are created. These are pooled investment vehicles, like mutual funds, which the International Financial Corporation has pioneered. In conclusion, he surveys the advantages and disadvantages of such investments.

Mr. Louis considers the objectives of the Single European Act of 1986, including the main objective of building the internal market through the complementary principles of essential harmonization of regulation and mutual recognition of regulation. He analyzes EEC Treaty Article 67, which provides for the liberalization of capital movements. Then he examines in detail the First and Second Banking Directives of the European Community. While the First Directive provides for mandatory licensing of credit institutions and common basic licensing criteria, the Second Directive provides for a single banking license according to which a credit institution licensed to operate by one member state can exercise its authorized activities throughout the European Community. In concluding, Mr. Louis addresses the possible evolution of a supervisory framework. In particular, he examines the role of the proposed European System of Central Banks and the European Central Bank in managing the monetary policy of the European Union and discusses its role in promoting a payment system.

Professor Piontek surveys the state of property law in Poland. In particular, he discusses several important subjects that must be addressed in the transformation of law that had been adapted to the needs of a command economy. These subjects include: (i) the need to provide for the uniform treatment of property irrespective of the public or private status of the parties; (ii) the recognition that land owned by the state may be transferable; (iii) the development of a functioning capital market; and (iv) the privatization of the state sector of the economy. He examines the right to own capital assets and negotiable instruments and the role of the state Treasury as the effective owner of capital. He describes the rights of foreigners to own and deal with property in Poland through perpetual usufruct of real estate, leasing real estate, and purchasing private land and buildings. Professor Piontek surveys the procedures for establishing a private commercial bank with foreign capital and the regulations governing such banks.

Professor Izdebski first mentions the general problems of economic, legal, and banking reform in Eastern Europe. He provides an overview of the Polish economic reform program, a principal aim of which has been monetary stabilization, and the Polish privatization bills. Finally, he compares the Polish experience to the Hungarian reform program.

Professor Gabor considers economic and legal reforms that have been introduced in Hungary. He examines the nature and purposes of the comprehensive Code of Economic Association that was enacted in 1988. Then he describes the Transformation of Economic Organization and Economic Association Act of 1989, which was the vehicle for privatizing state-owned enterprises. Professor Gabor concludes with a look at ad hoc privatizations and two laws enacted to support the privatization process. The first established a State Property Trustee to act as a manager and guardian of state property in the course of transformation. Reporting to Parliament, this Trustee has power to examine the valuation and terms of sale of state property and to exercise a limited veto power in privatization transactions. The second law sets out a regulatory framework for privatization according to which substantial transfers of state property must be included in a plan subject to the approval of the State Property Trustee.

Professor Jack was the chairman of the Committee of Inspection, which was established by the U.K. Treasury and the Bank of England to conduct a comprehensive review of banking mechanisms and practices. Among the 83 recommendations of the Committee are a number that Professor Jack has singled out for particular mention. Thus, to address the problem of stolen checks, the Committee recommended a special non-transferable check. It also recommended that the negotiable instruments legislation be changed to recognize instruments denominated in units of account. In the area of electronic funds transfer, the Committee recommended against comprehensive new legislation while recognizing that a case could be made for statutes in regard to (i) disputed transactions through automated teller machines and (ii) timing of finality. The Committee pointed to an erosion of bank-customer confidentiality, which Professor Jack traces to the compulsion of law exception to confidentiality that is recognized in U.K. jurisprudence. An important recommendation of the Committee that was accepted by the Government was the need to maintain and develop high standards of banking practice through voluntary agreement by banks on a code of banking practice.

Mr. Pigott traces the development of banking regulation in the United Kingdom over several decades. For many years, the Bank of England exercised its supervisory functions informally, monitoring each bank’s performance individually. Following financial difficulties experienced by secondary banks in the mid-1970s, the Government produced a White Paper, which led to the Banking Act 1979. This was the first statute in the United Kingdom to govern the establishment of banks and the conduct of banking business. After the collapse of Johnson Matthey Bankers, a new statute was enacted in 1987. The Banking Act 1987 abolished the two-tier system of regulation that had been introduced by the earlier Act. Drawing on the experience of the Johnson Matthey collapse, the Act introduced reporting thresholds for large exposures. It also placed restrictions on the ownership of banks. In addition to regulation under the Banking Act, banks in the United Kingdom are also subject to the regulation of their investment business under the Financial Services Act 1986. In most cases, authorization to engage in investment business is obtained from the several Self-Regulating Organizations to which the Government, through the Securities and Investment Board, has delegated authority. Mr. Pigott discusses changes in the London Eurocurrencies market involving a trend toward securitization and concludes with an analysis of two causes that, he believes, have led to the erosion of banking confidentiality in the United Kingdom. These are statutes enacted to (i) counter drug trafficking and the related activity of money laundering and (ii) prevent terrorism and identify funds utilized in its wake.

Mr. Jones investigates the history of the problems that the Financial Institution Reform, Recovery, and Enforcement Act (FIRREA) was meant to resolve. He describes the regulatory structure created after the Great Depression to govern banks and the securities industry and explains the origins of the savings and loan crisis. Next, he reviews the changes introduced by FIRREA, including the creation of the Resolution Trust Corporation, the Resolution Funding Corporation, and the Office of Thrift Supervision, and the abolition of the Federal Savings and Loan Insurance Corporation and the Federal Home Loan Bank Board. Mr. Jones examines other aspects of FIRREA, including its requirements of uniform standards for banks and S&Ls, and the expanded enforcement powers that it mandates for federal banking agencies. Then he considers how to address the moral hazard problem which arises when bank creditors are protected. As a consequence of that protection, there is little incentive for them to concern themselves with the condition of their depository institution. Under pressure from these creditors for higher returns, bank management may be tempted by a level of risk that is inconsistent with safety and soundness. When the bank ultimately encounters difficulties, the management may make large bets on even riskier projects in the hope that by so doing they may keep the bank from failing. When these fail, the losses to the insurer are increased proportionately. Alternatives to the current system include shifting part of the risk to the depositors (so that they have an incentive to monitor the institution) and imposing greater market discipline on banks (for example, mandating greater separation between management and the board of directors). Mr. Jones’s concluding remarks focus on the need to keep the insuring agency independent of its industry and of political considerations.

Mr. Schott addresses the expansion of products and services offered by U.S. commercial banks. He begins by describing the regulation of banks on the national and state level and the geographic and product limitations imposed on banks. Then he considers the effects of competition from investment companies and other financial institutions. He outlines regulatory initiatives that have permitted banks to extend the scope of their activities and emphasizes the need for U.S. banks to be able to compete in the global market for financial services. Mr. Schott provides an analysis of what he submits is needed to expand commercial bank activities in terms of reducing geographic barriers and offering new products and services. The latter include insurance brokerage and securities business. He believes that banks should be able to engage in new activities through subsidiaries as well as through holding company affiliates. He stresses that the banking industry must utilize available technology so as to compete efficiently in both the domestic and international marketplace.

Mr. Mattingly explores the history of the legal separation between U.S. commercial banking and investment banking that occurred with the passage of the Glass-Steagall Act in 1933. It was due, he believes, to a coincidence of events during the Great Depression: an increasing wave of bank failures, a decision by two major banks to abandon securities business following Senate hearings that disclosed abuses and scandals by banks in that business, and the desire to seek a legislative remedy for an activity perceived to have been a cause of that Depression. He outlines the four provisions of the Act and then discusses the growing pressure in recent years to change the Act. Mr. Mattingly then turns to the administrative and judicial decisions that, by increments, have permitted commercial banks to reenter areas of investment banking, and the legislative proposals to repeal or reform the Glass-Steagall Act.

Mr. Kohn reflects on the responsibility of central banks for the stability of financial markets. After raising questions about the importance of stability and the tools central banks have at their disposal to maintain it, he proposes answers. He takes inventory of the microeconomic tools that central banks have to deal with the threat of financial crisis: the discount window, deposit insurance, and banking supervision and regulation. A second set of tools at their disposal is macroeconomic: open market operations and changes in the discount rate to affect interest rates and the money supply. The two sets of tools work most effectively together. But do central banks go too far in trying to ensure financial stability so that a special kind of moral hazard arises? He describes the conundrum that may arise when central banks ensure too much against risk and thereby unintentionally encourage market inefficiencies through the promotion of excessive risk taking and a resulting misallocation of resources. He considers the implications of banks that are “too big to fail.” At the same time, he queries whether the scope of central bank powers has been focused too narrowly on commercial banks since, with the blurring of lines between financial intermediaries and their products, systemic risk may take on new dimensions.

Mr. Patrikis explores how financial market participants, when buying or selling securities or foreign exchange, may reduce their exposure by trade matching or trade netting, on an exchange, or through a gross settlement system, net settlement system, or netting system. He describes two ways of settling on a net basis and, as examples, discusses (i) the Participants Trust Company, which is an intermediary handling certain government guaranteed mortgage-backed securities and (ii) the Depository Trust Company, which is used for securities that clear on stock exchanges. Next, he examines funds transfers and, in particular, the CHAPS and CHIPS systems, which are multilateral wire transfer of funds systems that settle on a net basis. Mr. Patrikis reviews Article 4A of the Uniform Commercial Code, which governs the rights of parties using wholesale payment systems and describes the role of the Federal Reserve payments-system risk-reduction program that deals with daylight credit risk. In conclusion, he notes various activities of the Group of Thirty, UNCITRAL, and the Group of Ten Central Bank Governors to improve equity securities clearing and settlement and payment systems.

Mr. Lucas considers financial innovation. He begins by describing new capital market instruments resulting from syndicated loans, the use of floating rates, and the securitization of assets. The complexity of the resulting instruments continues to develop, giving rise to such phenomena as indexed bonds, warrant bonds, and junk bonds. A second category of innovation encompasses derivative instruments, so called because they are defined and priced in relation to some other financial or real asset rather than an intrinsic value. These include futures, forwards, swaps, and options. In particular, Mr. Lucas examines swaps, according to which, pursuant to agreement, streams of payments may be exchanged against one another to the advantage of both parties. He suggests that anything can be swapped against anything else, as long as there is a market for the underlying assets. Thereafter, he examines options, which are contracts conveying the right, but not the obligation, to purchase or sell a given financial instrument at a fixed price before or at a specified future date. He suggests that some options exist in the general economy that are not fully recognized. Finally, he describes forces that lead him to conclude that segmented financial markets must ultimately converge.

Ms. Tigert discusses whether the head office of a bank should be liable for the deposits made in a foreign branch where the assets of the branch have been frozen or expropriated by the sovereign government of the country where the branch is located. In analyzing the issue, she examines two U.S. cases. In one, the court ruled that by operating through an overseas branch, rather than a separately incorporated subsidiary, the defendant bank assumed the risk that it would be liable elsewhere in the world for deposits made in the branch. In the other, the court ruled that the defendant bank’s head office was liable for repayment of deposits made in its overseas branch because the parties to the interbank transfer had agreed that the accounts would be settled in the jurisdiction of the head office. She examines three issues raised by these cases: where is the situs of the debt for deposits made in a foreign branch of a U.S. bank, what law applies to the obligations related to a foreign deposit under applicable choice of law rules, and what are the consequences of finding the head office of a U.S. bank liable for repaying a Eurodollar deposit based on standard clearing instructions that the deposit and repayment will be made through accounts in New York for final credit and debit in a foreign branch of a U.S. bank.

Mr. Zeldin examines U.S. money laundering legislation. The United States, he notes, is one of a growing list of countries that has found it necessary to enact money laundering legislation in order to counter the flow of money to criminal organizations. He offers an analysis of the U.S. laws regulating domestic transactions, international transportation of funds, and monetary transactions in criminally derived property. Next, he discusses U.S. money laundering forfeiture laws, which allow for domestic and international sharing of confiscated assets. He provides an overview of international initiatives on the subject: the UN Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances; the Council of Europe Convention on Laundering, Search, Seizure, and Confiscation of the Proceeds from Crime; and the recommendations included in the final report of the G-7 Financial Action Task Force on money laundering. Mr. Zeldin concludes by emphasizing the need to establish legal mechanisms to ensure that the worldwide monetary system cannot be used by international criminals. The unimpeded flow of illicit money through the international monetary system leads to the corruption of societies and the destruction of law-abiding institutions and individuals.

Mr. Freeland surveys the work of the Basle Committee on Supervisors and particularly, its Capital Accord, the Basle Concordat, and the Committee’s money laundering initiatives. After a brief look at the origins and history of the Committee, he analyzes the 1988 Capital Accord, which introduces an 8 percent capital standard for banks operating internationally. He discusses as an objective of the accord the creation of a level playing field for international banks. Next, he turns to the Basle Concordat of 1983, which is a blueprint for collaboration between a host and a parent supervisor of a foreign bank. He discusses its two main principles: that no foreign bank should escape supervision and that the supervision should be adequate. Then, he discusses the Supplement to the Basle Concordat. Two noteworthy provisions of the Supplement are mentioned. The first concerns recommendations designed to ensure that banking licenses are not given to unsuitable applicants. The second concerns the ability of bank supervisors to exchange information with foreign authorities free from legal constraints governing bank secrecy. In conclusion, as regards the Statement of Principles on Money Laundering, Mr. Freeland focuses on its four basic principles: know or identify the customer, comply with the applicable requirements of the law against money laundering, cooperate with the law enforcement authorities, and train staff adequately to carry out necessary procedures including the maintenance of internal records to provide an audit trail of transactions.

Mr. Herrmann discusses three projects of the United Nations Commission on International Trade Law. These are the Convention on International Bills of Exchange and International Promissory Notes, a Model Law on International Credit Transfers, and a proposed uniform law on independent guarantees and letters of credit. First, he notes that the Convention, which is designed for optional use in international transactions, contains innovations concerning floating interest rates, forgeries, protected holders, liability of transfer, and aval or guarantee. Next, he writes about the origin and scope of the Model Law. Existing law on credit transfers tends to be fragmentary rather than comprehensive in nature. The Model Law would cover international credit transfers, whether paper based or electronic, but would not cover debit transfers. Finally, in reference to the proposed uniform law, Mr. Herrmann briefly contrasts letter of credit law and the law on independent guarantees. He notes that although a guarantee and a credit may be functionally equivalent, their legal frameworks under existing domestic laws are quite different.

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I would like to express my gratitude to J.R. Morrison of the Fund’s External Relations Department and to her colleagues Leo Demesmaker and Rozlyn Coleman for expert editorial assistance, and to three researchers who lent their efforts to the publication of this volume: Pamela Bickford Sak, Dr. Rosa Lastra, and Linda Hays. Thanks also go to Clare Huang and Sue Khandagle, my assistants, who contributed both to the seminar and to the publication of its proceedings. Three members of the Fund’s Graphics Section also made important contributions: Philip Torsani designed the cover, Betty Maguire designed the book’s interior, and Julio R. Prego typeset the text. Manuscripts were prepared for typesetting by Miriam Camino-Wolosky, Audrey Gross, and Marie-Claude Carrere, and editorial assistance was provided by Dorothy Thibodeau. Finally, I am indebted to Francois Gianviti, General Counsel of the International Monetary Fund, and to members of the IMF Institute, who, through their guidance and support, made this project possible.

Robert C. Effros

April 1994

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